BC STORIES

Stalling Growth: Canada’s Economy Shrinks at End of 2025 as Rate Cut Pressure Mounts

Canada’s GDP shrank at the end of 2025 as businesses cut inventories. Discover how this impacts the Bank of Canada’s rate cut timeline and 2026 growth.

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The 2025 Economic Cold Snap

The Canadian economy experienced a sharper-than-expected cooling at the end of 2025, leaving policymakers and investors scrambling to recalibrate their expectations for the coming year. Data released today reveals that the national Gross Domestic Product (GDP) contracted during the final quarter, a move largely attributed to a significant reduction in business inventories. This trend of “destocking”—where companies sell off existing goods rather than producing or importing new ones—acted as a significant drag on economic output, offsetting gains in other sectors.

Understanding the Inventory Impact

Economists point to the inventory drawdown as a sign of business caution. After several years of supply chain volatility, many firms had built up substantial cushions of stock. As consumer demand softened throughout the latter half of 2025, businesses prioritized clearing these backlogs to improve cash flow and reduce carrying costs in a high-interest-rate environment. While this process is technically a subtraction from GDP, some analysts view it as a necessary correction that sets the stage for future growth when restocking eventually resumes. However, the immediate impact has been a cooling of the headline growth figures that far exceeded analysts’ initial fears.

The Bank of Canada’s Policy Dilemma

The latest figures place the Bank of Canada (BoC) in a delicate position. For months, the central bank has maintained a holding pattern, waiting for clear evidence that inflation is sustainably returning to its two percent target. However, the current growth trajectory for the first quarter of 2026 is trending at approximately 1.0 percent, significantly underperforming the BoC’s own forecast of 1.8 percent. This underperformance suggests that the economy is cooling more rapidly than anticipated, potentially opening the door for rate cuts sooner than the mid-2026 consensus previously held by many market participants.

Expert Perspectives on Growth and Rates

Andrew Grantham, a senior economist at CIBC, noted that while today’s data might not be enough to move the central bank immediately, the outlook is shifting. Grantham highlighted that any negative trends in the job market, which has so far remained relatively resilient, would be the likely catalyst for a change in the BoC’s thinking. Similarly, Douglas Porter, chief economist at BMO, described the current growth as “mild” at best, suggesting that while the door to rate cuts is “slightly ajar,” the central bank is not quite ready to walk through it just yet. The cautious tone from the BoC reflects a fear of cutting too early and reigniting inflationary pressures, particularly in the housing market.

Silver Linings in the Revision Data

Despite the weak finish to 2025, the report offered some positive news in the form of historical revisions. The GDP figures for the second quarter of 2025 were revised from a -1.8 percent contraction to a much shallower -0.9 percent. Dominique Lapointe, director of macro strategy at Manulife Investment Management, pointed out that these revisions mean the economy was actually on firmer footing heading into the second half of the year than previously understood. This revision effectively aligns the total size of the Canadian economy by year-end with earlier, more optimistic forecasts, despite the fourth-quarter stumble.

A Cautious Outlook for 2026

As Canadians look toward the remainder of 2026, the economic narrative remains one of caution. Consumers, squeezed by the lingering effects of high debt-servicing costs, have pulled back on discretionary spending. This was evident in the third-quarter data, which was also revised downward to 2.4 percent annualized growth from 2.6 percent. Economists described that period as a “mixed bag,” where growth was artificially supported by a drop in imports rather than a surge in domestic productivity. For the average Canadian household, the primary concern remains whether the current slowdown will translate into broader job losses or if the economy can achieve the elusive soft landing that the Bank of Canada has been aiming for.

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BC STORIES

Why B.C.’s Conservative Campaign Face is Drawing Scrutiny Over Past Social Media Comments

B.C. Conservative campaign director Katy Merrifield faces criticism from the NCCM and political leaders over past anti-Islam social media posts.

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Controversy Surrounds Senior Campaign Official

B.C. Conservative campaign director Katy Merrifield is confronting widespread condemnation after an anti-Islam message she published on social media came to light. The June post on X, which stated “F–k Islam. Defend Western civilization,” was made in response to an inquiry into child sexual exploitation in the U.K. before being removed. Merrifield, previously the head of communications for federal Conservative Leader Pierre Poilievre, holds an administrative role with the provincial party rather than a candidate spot.

Reactions and Call for Accountability

The National Council of Canadian Muslims (NCCM) voiced deep hurt over the remark and pointed to additional posts reflecting a pattern of Islamophobic rhetoric. Calling for good-faith discussions to address Islamophobia, the group noted that Statistics Canada recorded a roughly 173 per cent surge in police-reported anti-Muslim hate crimes nationally between 2020 and 2024. B.C. NDP Leader David Eby stated Saturday that the remarks were deeply hateful toward a specific faith group and insisted there must be consequences, warning that no community is safe if political leadership permits such behavior. CentreBC Leader Elenore Sturko also criticized the party’s leadership, arguing that those who fail to stand up for all British Columbians should not seek the premier’s office.

Explanation and Party Response

Merrifield addressed the matter on Friday, explaining that her original post was fueled by her personal history as a rape survivor and her emotional reaction to accounts of sexual abuse against young girls in the U.K. She noted that she took the post down within hours because her anger was intended for the extremism used to justify those crimes rather than Muslims or their religion. While the NCCM highlighted that she offered no apology or acknowledgement of the pain caused, the B.C. Conservatives shared a statement from Surrey City Centre candidate Zeeshan Wahla. Wahla described her language as unacceptable but differentiated her situation from candidate Joachim Agou—who was recently dropped for posts targeting Palestinians and Pakistanis—by stating Agou incited violence while Merrifield was reacting to sexual trauma. CBC News reached out to B.C. Conservative Leader Lorne Doerkson but received no statement prior to publication.

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BC STORIES

BC Supreme Court Judge Set to Rule on Sentence Length for Former Gang Member

Defence lawyers recommend 12 to 14 years for Ekene Anigbo for the 2021 Naramata manslaughter of Kathleen Richardson. A judge rules Nov. 2 in Kelowna.

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Judicial Decision Expected in November

B.C. Supreme Court Justice Alison Beames is scheduled to deliver a sentencing ruling on Nov. 2 regarding Ekene Anigbo following a two-day hearing in Kelowna.

Defence lawyers for the 27-year-old former gang member have asked the court for a term of 12 to 14 years. Anigbo was convicted of manslaughter on Aug. 14 in connection with the June 9, 2021 death of 57-year-old Kathleen Richardson inside her Naramata residence.

Dispute Over Rehabilitation and Penalty

The recommendation from the defence directly contrasts with the prosecution’s request on Oct. 7 for life imprisonment without parole eligibility for 10 years. Defence counsel argued that the Crown was seeking to artificially inflate the sentence, pointing out that Anigbo has ended his gang ties since 2024 and completed anger management, employability skills, and Indigenous programming at Okanagan Correctional Centre.

If Justice Beames adopts the defence proposal, Anigbo would become eligible to apply for parole after completing one-third of the sentence.

Details of the Fatal Incident

Anigbo was originally tried for first-degree murder, but Justice Beames determined the Crown did not prove beyond a reasonable doubt that he fired the lethal shots. However, court proceedings established that Anigbo and co-accused Jalen Falk entered the home together armed with at least two handguns to track down Richardson’s son, Wade Cudmore, who was believed by associates to have killed two brothers and stolen cash and drugs.

When they discovered Cudmore was absent, the pair attempted to extract information from Richardson. Evidence showed she resisted, sustaining non-fatal injuries to her hands and arms, before the two men worked together to kill her and fled the scene. Her body was later discovered in her basement by an RCMP officer arriving to caution Cudmore about potential danger.

Related Legal Outcomes

The fatal event was tied to a broader sequence of violent incidents. Cudmore was taken into custody the day after his mother’s body was found and was subsequently convicted of two counts of second-degree murder involving the deaths of brothers Erick and Carlos Fryer.

Meanwhile, Falk entered a guilty plea to second-degree murder for Richardson’s death and received a life sentence in February with no chance of parole for 16 years.

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BC STORIES

Loss of Newborn Calf Puts Fresh Focus on Endangered Southern Resident Whales

A critically endangered southern resident killer whale, J31, was seen pushing a dead newborn calf in B.C. waters, raising concerns for the population.

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Tragic Sight Recorded Off Sombrio Point

Researchers with the Center for Whale Research confirmed that a female southern resident killer whale was seen pushing a dead newborn calf on her nose on Oct. 3 in the Strait of Juan de Fuca near Sombrio Point.

Mark Malleson, a researcher with the Washington-based organization, spotted the 31-year-old orca—identified as J31 or Tsuchi—travelling alongside her immediate family. According to a statement from the group, “It s unclear whether the newborn was a male or female, if it had been carried to full term prior to birth, and if it died after birth or was a stillbirth.”

Reproductive History and Population Pressures

Born in 1995, Tsuchi has a history of reproductive loss, including failed pregnancies and a deceased calf she carried in 2016. Her only surviving offspring is J56, a female named Tofino who was born in 2019.

The loss underscores the deep reproductive challenges confronting the critically endangered population. The Center for Whale Research emphasized that access to large, nutritionally rich Chinook salmon remains one of the primary factors limiting their ability to recover.

“For a population as small as the southern residents, the successful birth and survival of every calf matters,” the organization stated.

Pattern of Loss Across Pods

Tsuchi’s loss recalls similar events documented in the southern resident population, which comprises J, K and L pods. In 2018, J35 (Tahlequah) gained international attention after carrying her dead calf over 1,600 kilometres during a 17-day journey. Tahlequah was seen carrying another dead calf on her head or snout in early 2025. Later that year, 26-year-old J36 (Alki) lost a female calf—marking her fifth documented pregnancy, with only one calf surviving past infancy for under two years.

Recent census data from the Center for Whale Research recorded 74 southern residents, up by one from 73 in 2024. Although two births—K47 in December of last year and L130 in June—raised the total to 76, another calf, L129, is presumed dead after going missing from L-pod in June following observations of poor physical condition.

“The southern resident killer whales remain critically endangered, and their recovery depends not simply on increasing the number of pregnancies, but on creating the conditions in which mothers and calves can survive and thrive,” said the Center for Whale Research.

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